With all the discussion about the “fiscal cliff” and the big expiring tax cuts and all, some of the normal, smaller expiring things are getting lost in the shuffle… like, say, the $12 billion wind Production Tax Credit. Local St. Louis representative Scott Sifton explained on the radio the other day why he thinks renewing it “shouldn’t be a partisan issue.”
Here’s what he said:
It creates jobs in their districts. Much of the land is in districts represented by Republicans. We’re talking about revenue for farmers, we’re talking about jobs for people in their district.
Here’s what I heard:
Free money. Everyone should support giving people free money. Government money creates jobs so government should give everyone money and create jobs for everyone everywhere all the time.
Isn’t it interesting how quickly rent-seekers resort to “creating jobs” to defend their slice of the government pie? It’s almost like everyone thinks “creating jobs” is a sort of inherent public good that trumps the more ideological public good that justified the original government spending.
Sifton (D) could have argued that the wind subsidy should continue because it’s important for the government to encourage investment in renewable energy, or something like that. But Republicans might disagree with that, so Sifton argues they should support it because it creates jobs for their constituents. Republicans, for their part, do the same thing when they talk about all the jobs that will be lost if the defense “sequestration” kicks in.
But when you try to use job creation to justify a form of government spending and completely remove it from the original justification, it makes things look pretty silly, because you’ve removed the justification that makes this spending that we are doing better than other spending that we’re not doing. There are lots of other things the government could spend money on to create jobs; why should it keep spending this much money creating these jobs for these people? If that’s the only reason to continue this program, why shouldn’t the government spend even more money creating jobs for everyone?
The real reason, of course, is that creating jobs is not the primary reason government spends money, nor should it be the primary justification to continue various programs. The irony is that when people resort to the populist pseudo-public-good defense of expensively “creating jobs” for a few people, we lose the chance to discuss the legitimate public-good defense about the ways various programs are supposed to be benefiting the entire nation. Then again, if we did that, we might discover that so many of them actually aren’t…
Krugman had a little post a while back calling out “weaponized Keynesianism” (http://krugman.blogs.nytimes.com/2012/09/02/mitt-romney-weaponized-keynesian/). So, there’s that (to be filed in the hypocrite folder (uh-oh, its overflowing again!)).
I can see a couple arguments in favor of what Sifton said. The first is Keynesian to be sure: We should simply be spending money (on credit) until we have a full recovery. Then we should cut spending (because of our large debt). This is a reasonable approach that most economists would agree with.
The second is simply that it is an investment. Putting aside economic timing, government investments often lead to great successes. It is pretty easy to see how this could be true with regards to wind generation. A foothold in this new industry could lead to some big employment gains down the line. Of course, it is pretty easy to see how this could be a boondoggle (similar to ethanol). Government investments (like business investments ) are full of such successes and failures. In all but a few cases*, I would agree with you. I think it makes sense to judge a project on its own merit. The possible job effect is simply one consideration, but it shouldn’t be the main one.
* I think the bar should be set pretty high if the purpose of the government spending is to “create jobs” (outside of a recession). For example, if a state wants to invest in tourism, I think they should show that the such spending will really result in an increase in tourism.
Krugman had a little post a while back calling out “weaponized Keynesianism” (http://krugman.blogs.nytimes.com/2012/09/02/mitt-romney-weaponized-keynesian/). So, there’s that (to be filed in the hypocrite folder (uh-oh, its overflowing again!)).
I can see a couple arguments in favor of what Sifton said. The first is Keynesian to be sure: We should simply be spending money (on credit) until we have a full recovery. Then we should cut spending (because of our large debt). This is a reasonable approach that most economists would agree with.
The second is simply that it is an investment. Putting aside economic timing, government investments often lead to great successes. It is pretty easy to see how this could be true with regards to wind generation. A foothold in this new industry could lead to some big employment gains down the line. Of course, it is pretty easy to see how this could be a boondoggle (similar to ethanol). Government investments (like business investments ) are full of such successes and failures. In all but a few cases*, I would agree with you. I think it makes sense to judge a project on its own merit. The possible job effect is simply one consideration, but it shouldn’t be the main one.
* I think the bar should be set pretty high if the purpose of the government spending is to “create jobs” (outside of a recession). For example, if a state wants to invest in tourism, I think they should show that the such spending will really result in an increase in tourism.